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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. ATC = TC/Q = AFC + AVC






2. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






3. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






4. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






5. The lost net benefit to society caused by a movement away from the competitive market equilibrium






6. Ed < 1






7. Ed > 1 - meaning consumers are price sensitive






8. A firm that has market power in the factor market (a wage-setter)






9. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






10. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






11. When firms focus their resources on production of goods for which they have comparative advantage






12. Ed = 1






13. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






14. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






15. AVC = TVC/Q






16. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF






17. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






18. The most desirable alternative given up as the result of a decision






19. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






20. The additional cost incurred from the consumption of the next unit of a good or a service






21. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur






22. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary






23. Entry of new firms shifts the cost curves for all firms downward






24. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






25. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






26. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






27. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






28. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






29. Models where firms agree to mutually improve their situation






30. AFC = TFC/Q






31. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






32. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






33. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






34. Ed = 8 - infinite change in demand to price change






35. Ed = 0 - no response to price change






36. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






37. The change in quantity demanded resulting from a change in the price of one good relative to other goods






38. Total product divided by labor employed. APL = TPL/L






39. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






40. Ei = (%dQd good X)/(%d Income)






41. Product demand - productivity - prices of other resources - and complementary resources






42. Costs that change with the level of output. If output is zero - so are TVCs.






43. Exists at the point where the quantity supplied equals the quantity demanded






44. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






45. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good






46. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






47. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK






48. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






49. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






50. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials